Despite a tough year for the banking world and the global economy, those active in the trade and export markets are seemingly still doing something right, with over 4,000 votes cast for GTR’s first annual readers’ poll on the leading financial institutions in trade finance 2008.
The annual readers’ poll for GTR Leaders in Trade 2008 was set up as a chance for our readers to let us know their views on which financial institutions have really excelled in the trade, commodity and export finance markets during 2008.
The competition has been divided into a select group of categories, with 17 different awards available, covering both regional achievements and specific financing expertise.
The first six months of 2008 were relatively benign for the trade, export and commodity finance worlds, with the correction in pricing and the return of increased risk assessment all proving positive trends for the trade financier.
However, the second half of the year threw the banking world, including trade finance markets, into chaos. For many banks it has been a case of just surviving the upheaval, as they see their peers retract from certain markets, close down departments and of course, inevitably cut staff. Despite huge governmental support in the banking sector, no one can really foretell what 2009 will bring, and how deep and how long the current economic downturn will last.
However, GTR’s inaugural awards hope to shed a little positive light on what has been a gloomy past six months, and take a moment to reflect on some of the year’s achievements.
Best Global Trade Finance Bank: HSBC
HSBC has scooped one of the most prestigious accolades in GTR’s first readers’ poll on leaders in trade finance 2008. GTR’s Best Global Trade Finance Bank award recognises HSBC’s capabilities across the wide spectrum of trade finance products and financing techniques, including its export finance and structured trade finance activities.
HSBC has emerged as one of the stronger players in the financial markets during the credit crisis, and this is clearly proving to be the case in its trade finance operations as well.
Lawrence Webb, global head of trade and supply chain at HSBC, comments: “HSBC is the trade partner of choice for companies around the world. Our geographic footprint and relationships with companies of all sizes and industries directly translates into HSBC being more in tune with global trade than any other institution.
“It is this first-hand knowledge on the true state of global trade that our customers value. Leveraging our knowledge, advice and next-generation product solutions, our customers are able to more efficiently manage their working capital and protect themselves against the risks of buying and selling internationally.”
Peter Luketa, managing director, global co-head of export finance at HSBC, further remarks: “HSBC has a highly experienced team with global representation in the export finance business. Our clients are often on both sides of the equation, importer as well as exporter so we can manage expectations and offer optimum solutions for all parties.
“We continue to solve financial problems in many different developing markets and have concluded deals in several new markets this year for example in Costa Rica, Columbia, Trinidad, Ukraine, Nigeria, Yemen, Pakistan, Sri Lanka.”
Over the last year, HSBC has also introduced export finance to major clients that previously may not have considered ECA support.
The bank has also concluded a number of landmark ECA-backed deals. Luketa elaborates: “A good example was the successful closure of the Samurai bond arranged for Pemex to support the development of the Ku Maloob Zaap offshore oilfield in the Mexican Gulf. This was the first ever bond for a Mexican issuer with an ECA and Nexi (Japan’s Nippon Export and Investment Insurance) wrap. It was also one of the largest bonds issued with an ECA wrap completed in extremely turbulent market conditions.”
This particular transaction involved bonds totalling ¥64bn, issued as Japanese yen floating rate bonds by Pemex Project Funding Master Trust guaranteed by Pemex and its three affiliated companies.
Nexi provided overseas untied loan insurance on the bonds, and the proceeds of bonds are to support the Ku-Maloob-Zaap oilfield development project.
Best Global Structured Commodity Finance Bank: Deutsche Bank
Despite dramatic fluctuations in the commodity prices over the past 12 months, Deutsche Bank’s structured commodity trade finance (SCT) team has skilfully navigated difficult markets and proven itself to be a solid, dependable player.
As John MacNamara, head of structured commodity trade finance at Deutsche Bank, remarks: “What we’re most proud of is the number of repeat mandates we’ve been getting from our clients, both in the emerging markets and in the OECD countries, particularly in the context that everything we do is syndicated so the client always has a choice. Unfair perhaps to single out any one client, but we’ve had our fair share of ‘good’ mandates this year.”
Deutsche’s team has also enjoyed the resurgence in popularity of tight, well-structured deals during 2008, particularly as other forms of financing have rapidly dried up. Unsecured loose structures have fallen by the wayside in preference for facilities involving some element of pre-export financing.
MacNamara adds that arranging a structured commodity deal is far from being a “fire and forget” product, noting that it is a product that requires continual interaction with the client, long after the deal is funded. It is through building long-standing relationships with clients that Deutsche has really excelled.
Furthermore, the success of Deutsche is also put down to its team’s combination of enthusiasm and experience, as well as its market position that allows it to be a little more selective when it comes to picking deals. “I must also concede that, not being an obvious “commodity” bank, we also have the luxury of not having to do every deal. This means we can afford to concentrate on the best clients,” notes MacNamara.
“I’ve always said a good client is worth a thousand covenants, and we’re seeing the proof of that pudding in the current situation with the massive commodity price corrections of the fourth quarter, which I think the commodity client base are handling in a very professional manner,” he adds.
In 2008, Deutsche Bank has regularly been seen working at mandated lead arranger level, often as co-ordinating bank on a number of high profile structured commodity finance facilities, including multiple deals with Rosneft Russian steel producer Severstal’s US$1.2bn five-year pre-export syndicated deal; NLMK’s US$1.6mn pre-export facility; and US$2.1bn pre-export debt facility for copper mining company Kazakhmys, and has also secured a total of eight mandates in a row on Duferco’s industrial assets in Belgium, Italy and Denmark.
Best Global Export Finance Bank: Société Générale
Société Générale has long established itself as a leader in export finance, so it is no surprise it managed to secure poll position as Best Global Export Finance Bank in GTR’s first readers’ poll.
Denis Stas de Richelle, global head of export finance, at Société Générale corporate and investment banking, comments: “Société Générale is honoured to receive the first GTR trade award for Best Global Export Finance Bank and our team wishes to warmly thank all our clients and partners for this success.
“The resilient and long-standing relationship between Société Générale corporate & investment banking and its clients and partners has shown how we make the difference together, in such a challenging environment ECA-backed financing prove to be the accurate solution in the current context, offering competitive pricing and structures. To better serve our clients, our teams are willing to pursue the development of tailor made solutions around the globe, and open new perspectives suited for the new export finance business.”
Société Générale has secured a number of firsts in recent years, being the first foreign bank to arrange Chinese ECA financing backed by Sinosure, and signing a high volume of deals supported by the Chinese agency since that debut transaction.
One such deal closed in 2008 was the US$592mn Sinosure-backed financing for the Indonesian’s electricity provider PLN. The French bank participated in the deal as a mandated lead arranger supporting a buyer’s credit in aid of a government sponsored scheme to build an extra 10,000MW of electricity capacity in Indonesia by 2010.
Commenting on the events of the last 12 months, Stas de Richelle adds: “Our biggest achievement this year has been to adapt our commercial strategy in line with the changing market conditions.
“Société Générale’s universal banking model proves to be a competitive advantage when answering the needs of export finance clients in 80 countries across five continents. Combining Société Générale corporate & investment banking expertise with our retail banking network’s proximity to clients enables us to strengthen our position as market leader.
He concludes, “And finally, one of the most valuable aspects for this year and the year to come is the partnership between banks and credit insurers, who will both play a determinant role in the future of export finance.”
Best Global Commodity Finance Bank: BNP Paribas
BNP Paribas commodity finance team has secured itself in the winning position in this category, with voters no doubt swayed in part with BNP Paribas’ global and long-standing presence in this market.
Philippe De Gentile, global head of energy and commodity finance at BNPP, comments:
“One of the strengths of BNP Paribas is that the bank has been involved in this market for a long time. We have lots of diversified activity, including a high profile in oil and gas deals, which positions us well in the market.”
The bank’s strong and well-established place in the market will serve the commodity finance team well during what is set to be a difficult 2009.
Commenting on some of the wider challenges facing the commodity financing world, De Gentile observes: “”Of course, one of the biggest challenges for 2009 is the sharp increase in pricing which is having an impact on every financing activity, in that liquidity is very scarce. The second challenge is balance sheet constraint. The volume of business you do in this market is correlated to the price of commodities which have fallen dramatically in the last six months. If commodity prices return to the historical levels seen last summer that would be extremely challenging for banks’ balance sheets.”
Getting a commodity finance transaction syndicated during the last six months has also been tough, and no doubt will continue to be a challenge for Gentile and his team during the early part of 2009.
“What we see are mostly club deals with few banks underwriting and selling in the market. Deals are arranged with the consensus of four or six banks, but even in club deals we are seeing a lot of defection,” De Gentile explains.
Guillaume Leenhardt, deputy head of energy and commodity finance at BNP Paribas, adds: “One of the bigger challenges will include the refinancing of revolving credit facilities, particularly those deals signed at low numbers and providing borrowers with backstop liquidity. Those traders going back to market will have to bite the bullet and pay higher prices.”
However, on a brighter note there are positive signs in certain areas of the market, and BNP Paribas is exceptionally pleased to have just secured approval as a mandated lead arranger on a major reserve-based lending (RBL) deal for Tullow, one of Europe’s biggest independent exploration and production companies with operations in Europe, Africa, South Asia and South America.
Leenhardt comments that the securing of credit approval for this “shows encouraging reception given the context, and [it is] set to be one of the biggest oil and gas financings for 2009, and a potential sign of a certain element of market revival for some banks.”
Best Factoring House: RBS
RBS has secured the top spot as the Best Factoring House, as voted for by the readers’ of GTR.
“We are delighted to be recognised as the ‘Best Factoring House’ by GTR. As a leading player in the invoice finance marketplace we are in a position to provide a number of more tailored products to our clients depending on their needs,” comments Martin Morrin, managing director, RBS Invoice Finance, based in the UK.
“The bank’s appetite to support good management teams, strong cashflows and competitive market positions remains undiminished and we remain committed to helping our clients who are affected by the economic downturn by introducing them to the benefits of invoice finance as an alternative mean of funding growth,” he adds.
The UK invoice finance sector has for over forty years been involved in the provision of financing of invoices, the collection of outstanding debtors and customer bad debt protection for UK businesses exporting overseas. A significant number of businesses have traded successfully abroad for some time and have their own in-house capabilities for collecting export invoices. As with all businesses though, they depend on working capital to grow their businesses whilst safeguarding against customer insolvency.
Non-recourse export invoice discounting facilities provide them with an immediate availability of cash at the point of invoicing and so long as they trade within the credit limits agreed by the financier, they are safeguarded against the customer’s inability to pay.
Morrin adds: “For the seasoned business looking at new markets overseas or for businesses which are looking to export for the first time, it is important to consider the potential benefits of export factoring.
“Cash availability and bad debt protection are key but also through “disclosing” the factor’s involvement to their clients’ customer’s, factoring companies are able to provide a comprehensive collection service, utilising experienced collection teams, and in the case of a few of the larger factors, collectors speaking a broad range of languages.”
Invoice finance has become a real alternative in the present economic climate when mainstream credit is in short supply. Cash flow is critical to every business and without it a business can not pay its workers or purchase raw materials and ultimately cannot function. An invoice discounting facility provides businesses with welcome headroom and the necessary funding to cope with any unforeseen occurrences. Companies can also utilise invoice finance facilities in a proactive way. For example it can be used to fund acquisitions, management buyouts or cash-out type deals. With quick and easy access to funding businesses can also take advantage early settlement discounts or negotiate enhanced terms with their suppliers.
RBS Invoice Finance is the major player in invoice financing in the UK and Europe with over 8,000 customers. It operates from 25 locations across the UK and continental Europe.
Best Forfaiting House: London Forfaiting Company
London Forfaiting Company (LFC) beat off the competition to secure itself the award of Best Forfaiting House.
It is perhaps the company’s tight focus on financing trade that has in part helped the company win readers’ votes. Simon Lay, managing director at LFC reflects: “We have dedicated a lot of resources specifically on forfaiting and trade finance for a very long time now. Actually we celebrate being incorporated for 25 years in 2009. Yet, just because a company does something for a long time, doesn’t necessarily make them good at it, but hopefully in LFC’s case it does and demonstrates a certain level of commitment to the product, focus on service and to loyalty to our customers. I think this commitment has also helped re-enforce our credentials with our peers.”
Looking back over a dramatic year in the world of finance, Lay adds: “Possibly the biggest achievement during the turbulent markets of 2008 was continuing to write business when the rest of the financial markets were collapsing around us.”
Despite the grim economic climate, the appeal of trade finance and forfaiting products has endured, even if in more recent months there has been a lessening pool of liquidity available to fund transactions.
As Lay notes: “One of the benefits of dealing with trade finance is that whilst sentiment for equities, bonds or syndicated loans in emerging markets has been turning sharply negative, trade seems to remain fairly resilient to this turmoil.
“Of course capital flight, negative perception and falling FDI in many markets have put pressure on local currencies, but as LFC is financing exports as well imports, the pendulum simply swings in a different direction but still provides us with opportunities.”
Lay notes a number of success stories at LFC over the last 12 months, demonstrating the company’s diversity of product range and its wide geographical reach. Landmark deals include a US$50mn bilateral funding deal in Korea and a €60,000 LC confirmation in Benin.
He adds: “Whilst some deals are driven more by liquidity and others by risk mitigation, LFC tries to position itself to meet both needs,” noting that in this current market, LFC is beginning to see a far wider variety of transactions in the market, receiving many requests for good quality assets as well as more exotic risks.
“All assets are well priced in the current market as the focus is on structure, risk mitigation and funding rather than price,” he observes.
“LFC tries to accommodate all transactions but in the current market we do try to give priority to clients with whom LFC has had a good relationship over a number of years. It makes sense to service those clients who have also supported us with transactions when the markets were flooded with cheap funding, as they were up until this year. We try to build long standing loyal relationships with our clients as we believe this is what will give dividends to both parties in the longer term.”
LFC was founded in 1984, and is a wholly-owned subsidiary of Fimbank in Malta.
Best Islamic Trade Finance Bank: HSBC Amanah
The Islamic financing market is becoming increasingly competitive as more players react to high demand for financial services that comply with sharia law. Yet despite a crowded marketplace, HSBC Amanah, the global Islamic banking division of the HSBC Group, is the favoured provider of Islamic trade finance products, according to GTR readers.
Nabeel Abdul Rahim, regional head of Amanah commercial banking, HSBC Middle East, in Dubai, comments: “HSBC Amanah brings both international service standards, and high level compliance with sharia regulations. Amanah leverages on trade team expertise and the group’s strong global network with 10,000 offices in 83 countries.
He adds: “With the 10th anniversary of Amanah launch, the business is aiming to grow the Islamic trade through investment in trade solutions; full range of import solutions launched in UAE and recently in Qatar.
HSBC Amanah’s trade services products are based around the concept of murababa, and Islamic method of financing commodity imports. Rather than lending money out at a certain interest rate, Islamic debt financing structures have been developed. These instruments, such as a murababa, provide fixed income alternatives as opposed to conventional interest gaining debt instruments. For instance, with a murababa, the capital provider or bank will purchase the required commodity from a third party and resell it at a predetermined higher price to the bank’s customer or the capital user. The client will then pay the higher price of instalments to the bank, and therefore has obtained credit but is not required to pay interest.
Commenting on the scope of services offered by HSBC Amanah, Rahim remarks: “HSBC Amanah has a wide offering of full trade solutions for regular working capital, as well as part of packaged structured project finance.” Reflecting on a number of HSBC Amanah’s achievements, he remarks that the bank’s import business has grown 10-fold this year compared to the same period last year.
Best Trade Finance Bank in Western Europe (excluding Nordic region): RBS
Royal Bank of Scotland (RBS) takes the honours for GTR’s inaugural Best Trade Finance Bank in Western Europe (excluding the Nordic region). The bank’s total tally includes a substantial number of votes fielded for ABN Amro, whose trade finance operations have now been merged into RBS.
“We are delighted once again to receive industry recognition for our leading trade finance offering, demonstrating our strong capability to support the real economy amid very challenging conditions,” says Daniel Cotti, head of global trade finance at RBS. “This award is particularly important to RBS, as it demonstrates our ability to provide best-in-class trade finance solutions to clients, enabling them to support key trading partners both within and outside Europe by leveraging the strength of our international capability.”
One key objective for RBS during 2008 was to introduce its clients to the ABN Amro trade product set, and connect them with this global network.
“This was as much a perception challenge as a technical or operational change,” claims Cotti, “as for a number of countries, RBS was not known as an international trade finance provider, so it’s good to see that our European clients feel the products and services we offer are genuinely meeting their business needs.”
Looking ahead, Cotti adds: “2008 has certainly been dramatic – no one has come out unscathed. And given the economic and financial uncertainty that we witness on an almost daily basis, it is hard to predict how 2009 will fare. What we do know is that as companies seek to manage their international business through the current economic cycle, there is greater risk in trade transactions throughout the global supply chain. In tough times, there is a flight to quality and expertise, and we are definitely seeing greater demand for our trade advisory capability and solutions than in the previous 12 months.
“It’s also important to note that although world trade growth has slowed, it hasn’t stopped, and RBS, as a leading global trade finance bank, continues to work hard to help our clients, their suppliers and customers do business internationally, wherever they are located.
“We are staying close to our clients, and while recognising today’s challenging market conditions, we offer a full suite of robust trade finance solutions that improve working capital efficiency, deliver enhanced transparency and control, and reduce trade cost and risk to our global client base.
“In this way, liquidity is provided to enable buyers and sellers to negotiate mutually beneficial payment terms and maintain the movement of goods to market.”
Best Trade Finance Bank in Eastern Europe: ING
ING has been voted the ‘Best Trade Finance Bank in Eastern Europe’, an accolade which will come as no surprise to most in the market given the bank’s track record and experience in the region.
“2008 was one of the best years ever for our business due to the high worldwide commodity prices for the first nine months, and the internationalisation drive of Eastern European producers,” claims Bernard Zonneveld, ING’s global head, structured metals and energy finance (SMEF), “who were able to acquire many additional producing assets in Europe, US, Canada, and some parts of Asia. Most of these acquisitions were based on financing support from western banks, and more specifically banks that have a clear understanding of their industry, like ING.”
Based on information out of the syndicated loans market, ING was also recognised as the number one syndicated loan provider in the Russian market over a large part of 2008, according to the bank. ING SMEF was present in virtually all important and sizeable metal transactions in the Eastern European market last year.
Some of the landmark deals to mention were: a multi-purpose structured facility of US$3.2bn for Evraz; an acquisition bridge financing of US$4.5bn for Rusal; a one-year acquisition bridge financing for US$1.5bn for Mechel; a bridge facility of US$1.2bn for TMK; Norilsk Nickel’s US$1.5bn pre-financing; and Metalloinvest’s pre-export financing of US$1.6bn.
But SMEF excelled not only in metals but in coal and fertiliser transactions in Eastern Europe. In coal, a landmark deal was the US$800mn pre-export financing for Suek, where ING SMEF was one of the arrangers and facility agent. On the fertiliser side, the bank structured with two other arrangers a US$1.5bn pre export financing for Eurochem.
Also worth mentioning is that for the only two Russian refinery financing deals (for TAIF and SNOS) last year, ING SMEF was sole mandated arranger. “This clearly underpins our strong name in the market, as originator, structurer and arranger. With a track record of over 15 years now in Eastern Europe, clients have appreciated our long-term commitment to them and their country and have a high regard for INGs’ professionalism and skills in dealing with different and sometimes difficult financing requests. Even in turbulent years like 1998 – and also in 2008 – ING’s SMEF unit continued to support its client base successfully in Eastern Europe,” adds Zonneveld.
He goes on: “Although 2009 looks like a tough year from the onset, we are confident that new opportunities will arise and give substantially better margins for our business all over the globe. We also feel further growth of our activity can be expected this year.”
He adds: “We are convinced that the current market crisis will cause some players in the commodity arena to exit this business segment but at the same time, the key players, well established in the market and seasoned in their business, will weather this crisis and stay on board. And we at ING certainly see ourselves in the latter category.”
Best Trade Finance Bank in the Nordic Region: SEB
SEB Bank successfully secured the accolade of Best Trade Finance Bank in the Nordic Region.
Over the last 12 months, SEB’s profile in the trade finance market has been rapidly rising, and is clearly recognised as one of the leading providers of trade finance in the Nordic region.
“SEB’s long history as a trade bank has resulted in close relationships with approximately 80% of the Nordic client base,” remarks Lars Millberg, global head of trade finance at SEB Bank.
One of the most important developments at the bank this year is the introduction of the bank’s innovative approach towards trade finance, a methodology that the bank refers to the Trade Finance Value Chain (TFVC).
“Through TFVC we can visualise waste and suggest improvements to the clients, instead of only using the traditional high risk focus which often hampers working capital and process efficiency perspective. TFVC puts focus on the integrated effect on professional management of working capital, contemporary processes and sound and cost efficient risk management,” explains Millberg.
Another key achievement for the bank was the establishment of an online networking site purely set up for the trade finance community. The website, known as The Benche, was launched in mid-November 2008, and offers banks and corporates the chance to exchange information about the trade finance market live via the web.
“The Benche offers a new virtual arena where trade finance professionals can meet, network, share and discuss various trade finance issues. The Benche has gained much positive recognition by the market and has attracted registered visitors from close to 100 countries during the first month alone, and with the number of members rapidly increasing by the day,” observes Millberg.
SEB is a North European financial group serving some 400,000 corporate customers and institutions and 5mn private individuals. SEB offers universal banking services in Sweden, Germany and the Baltic countries – Estonia, Latvia and Lithuania. It also has local presence in the other Nordic countries, Poland, Ukraine and Russia and a global presence through its international network in another 10 countries.
Best Trade Finance Bank in North America: J.P.Morgan
With few finding much to be cheery about on a rapidly emptying Wall Street, JPMorgan can take a little comfort in scooping GTR’s award for Best Trade Finance Bank in North America.
Reflecting on JPMorgan’s relatively strong position in the trade finance market, Bruce Proctor, global trade services head at JPMorgan, comments: “We continue to take a long-term view of markets and client relationships. JPMorgan has positioned itself as a consistent provider of market-leading capabilities.”
He concludes: “We have maintained a substantial level of investment in the trade finance business and see the delivery of innovative products and services as a key differentiating factor.”
Despite tough times this year, JPMorgan has clearly underlined its commitment to the trade finance market, with its treasury service business unveiling plans in mid-September to invest over US$1bn to expand and improve its cash management and treasury liquidity capabilities as well as boost investment in technology. The investments will help build an enhanced financial supply chain that combines JPMorgan’s trade finance, logistics, dynamic discounting and electronic invoice settlement capabilities.
JPMorgan is also hoping to tap into what it sees as a resurgence in the use of letters of credit (LC) used to finance international trade, particularly as surplus working capital used to fund open account financing has begun to dry up over the last 12 months. It reported in November 2008 that as a bank, it had seen a definite revival in the use of the traditional LC.
In fact, given the high profile of the JPMorgan in the trade finance arena, it had Jeremy Shaw, head of JPMorgan’s trade services business in Europe, Middle East and Africa, attend October’s World Trade Organisation (WTO) meeting. Called for by WTO’s director-general Pascal Lamy, the meeting aimed to discuss improving access to forms of trade finance in the emerging markets, in light of the credit and liquidity problems facing the international banking sector.
Noting other significant developments at the bank, Proctor adds: “We have focused on improving the global effectiveness of our trade programmes for North American clients.”
“We’ve also expanded our product offerings for middle market banking customers in the US, and have continued to build out our trade management consultancy capabilities for both corporates and financial institutions.”
JPMorgan treasury services in is a full-service provider of innovative payment, collection, liquidity, and investment management and trade finance, commercial card and information solutions to corporations, financial services institutions, middle market companies, small businesses, governments and municipalities worldwide. It has over 50,000 clients and a presence in 39 countries. It is the world’s largest provider of treasury management services, and a division of JPMorgan Chase Bank.
Best Trade Finance Bank in Latin America (including Caribbean): Citi
Despite a tumultuous year, Citi has scooped the majority of the votes to win the accolade of Best Trade Finance Bank in Latin America.
“In the Americas, Citi is unique in its ability to provide tailor-made solutions to a diverse and wide-reaching client base,” comments John Ahearn, Citi’s global head of supply chain management, structured trade and export and agency finance.
He adds: “These products span the simple trade finance loans right through to the complex distribution financing structures for risk mitigation. In Latin America, Citi’s market share in strategic countries such as Brazil, Argentina, Colombia and Mexico is representative of our wide range of clients and products; executing large, complex financings in all these major countries inclusive of ECA financing and traditional trade financing.
“In Mexico, specifically, Citi’s expertise is further specialised and managed through our large subsidiary, Banamex, adding another layer of local, specialised access while also bringing the strength of the Citi global platform to the region.”
During 2008, Citi reviewed its business model to further improve its ability to serve its customers, and decided to merge its export and agency finance, cash management and trade businesses into a new unit called treasury and trade solutions, which as Ahearn explains is, “designed to support the specialised and changing requirements in today’s trade marketplace”.
Reflecting on some of the achievements of his team in Latin America over the past year, Ahearn comments: “Given the depth of the liquidity crisis, there has been an increased need for financing in the region. Citi is leveraging our expertise and providing additional capacity to our clients using our own balance sheet as well joining together with export credit agencies and multilaterals to develop specialised structures. Citi has established a leading role in this space and we are anticipating more of these types of specialised financings to be developed in the region.”
He adds that Citi’s delivery channels such as its award-winning CitiDirect also give the bank a competitive edge. He explains: “[It] can provide our clients, whether they are corporate, financial institutions or public sector, with a front-end transaction tool that will help them manage risks on an end-to-end basis including financial operating and accounting risk. Our trade finance solutions offer unrivalled trade receivables/payables process automation between vendors and buyers providing real-time management information customised to suit the specific needs of any trading partner.”
Best Trade Finance Bank in South Asia (India, Pakistan, Bangladesh, Sri Lanka only): ICICI Bank
GTR readers have voted India’s ICICI Bank the ‘Best Trade Finance Bank in South Asia’. Sudhir Dole, senior general manager and head – transaction banking group, at ICICI, says: “We would like to extend our gratitude towards GTR and our partners for choosing ICICI Bank. This award re ascertains our faith and will encourage us in better delivery.”
He adds: “It is our constant endeavour to facilitate growth in an inclusive and sustainable manner. We offer our customers world class financial services across all sections of society by deploying the latest technology and through innovation.”
ICICI Bank offers a wide range of trade services designed to meet short to medium-term trade financing requirements of Indian corporates thereby allowing them to capitalise upon new business opportunities as and when they arise.
The basket of trade products offered includes letters of credit, bank guarantees, rupee and foreign currency trade credit for exports and imports, remittances, collections, purchase/discounting of bills, funding backed by export credit agencies, forfaiting, risk participation solutions, reimbursement financing, and structured trade solutions.
Customers can further benefit from streamlined processes based on a sound technological backbone that is designed to provide ‘best in class’ service levels aimed at reducing problems associated with trade transactions, claims the bank. All transactions are processed in a centralised operations unit to ensure standardisation of delivery and close monitoring of turnaround time.
To ensure effective and customised product delivery, ICICI has a dedicated trade sales and product team, providing customers with customised solutions to cater to all trade finance requirements. Apart from understanding and catering to the requirement of the client, members of these teams actively dialogue with them to ensure delivery of the best solutions from across the globe.
In the last four years, India’s total external trade has grown from US$185bn to US414bn (an average growth rate of over 22% per year), claim analysts at the bank. A buoyant global economy and an increasing demand from emerging markets has driven exports to US$162bn (from US$63bn in FY04) while growing domestic consumption has resulted in imports growing to US$251bn (from US$78bn in FY04).
ICICI analysts highlight the following broad trends that are taking shape in international trade finance and to watch for the coming year:
A move away from open account: to lower bank costs and nurture existing relationships, many companies were moving to an open account method of trade. However in this volatile environment, the requirement for bank intermediation may increase and a move away from open account may be seen.
Increase of intra-Asia trade: with demand in western countries slowing, key emerging markets like China will become even more important. China is already India’s largest trading partner (trade with China has grown at an average of over 52% over the past four years). The traditional flows between India and Europe/North America may slow, but new trading blocks are rapidly emerging.
Increasing protectionism: current volatility in the financial markets and the slowdown in most major economies may result in several protectionist measures. Although there has always been a certain amount of restrictions to free trade, this is likely to increase in the coming year.
Online and integrated offerings: to reduce costs, Indian customers
are now seeking solutions which integrate with their back end systems and allow them to directly request/avail of trade finance facilities.
Corporates today increasingly look toward banks to provide them with comprehensive trade finance solutions which cover funding, hedging of risk (both credit and market), facilitating growth in foreign markets and comprehensive cash management.
Best Trade Finance Bank in Asia Pacific: Standard Chartered
Standard Chartered was the clear winner in the Best Trade Finance Bank in South Asia and Asia Pacific. This award recognises the bank’s expertise in trade finance, export finance and structured trade finance.
From an export finance point of view, Standard Chartered has led the way in export credit agency (ECA) backed financing in the Asian mobile telecoms sector. The bank stood out in the market by working to ensure the deal teams were as local as possible to their Asian clients. For example, this could mean structuring deals using the Asian offices of UK law firms.
Most of the bank’s deals in recent years have been with the Ericsson group as the supplier, with the backing of the Swedish ECA, EKN. The export finance team in Asia is likely to continue to focus on the telecom sector, with the pipeline for deals in 2009 looking positive.
Marcel Ivison, regional head of structured export finance at Standard Chartered, comments: “Standard Chartered Bank, export finance, Asia stands out because it has the best reputation in the market to deliver deals smoothly, competitively and on time. The Asia team will probably continue to focus on the telecom sector for the next few years too. The signs are very good that there is still enormous appetite for ECA telecom deals throughout Asia for the foreseeable future especially with so many new 3G licences being issued shortly as well as the continued 2G growth.”
The export finance team has enjoyed a number of other achievements in 2008, including the successfully working with China’s Sinosure on an ECA-backed financing for Hyundai Steel in Korea as well as reaching a comprehensive cooperation agreement with China Exim Bank which has led to both bank’s financing and increasing number of Chinese exports into emerging markets in Africa, Latin America and India.
Equally, Standard Chartered stood out for its capabilities in the structured trade finance for Asia Pacific.
Ong Tee Chong, head of structured trade finance for Asia Pacific, Standard Chartered Bank, comments: “We are indeed honoured to be named as ‘Best Trade Finance Bank in Asia Pacific’ in the readers’ poll in GTR. This reflects the strong Standard Chartered brand and the pool of professionals constantly delivering our commitment of being a valued partner to our clients.”
Standard Chartered has also excelled in the provision of trade finance and trade services in the Asia Pacific region.
As an example of this, for the second consecutive year, the bank has been ranked first for trade transaction volumes in Hong Kong and Singapore by Swift, the world’s largest financial messaging provider for banking organisations, securities institutions and corporate customers. This ranking was based on analysis of business volumes for the year ending September 30.
Commenting on winning GTR’s award, Tan Kah Chye, global head of trade finance at Standard Chartered Bank, remarks: “Standard Chartered has a long history of success built on strong partnerships partnering with our clients to enable them to win and grow their businesses across Asia, Africa and the Middle East.
“We are pleased that we have been recognised for our expertise in the Asia Pacific and for having not just a strong team on the ground to support our clients but a comprehensive suite of industry leading trade finance products that enable clients to optimise risk management and gain access to the credit they require.”
Reflecting on some of the key achievements for his team, Tan adds: “A highlight for this year was Straight2Bank Trade port which we introduced – the industry’s strongest trade platform that offers clients shorter turnaround times, improved service guarantees, 24/7 customer service and optimal utilisation of credit facilities.”
Standard Chartered Bank derives more than 90% of its operating income and profits from Asia, Africa and the Middle East, and has long been recognised a key player across the emerging markets.
Best Trade Finance Boutique Bank: Texel Finance
Winning the award for Best Trade Finance Boutique Bank is Texel Finance, which has continued to expand over the past 10 months.
Texel provides finance and risk mitigation services mainly to the commodity pre-export market as well as in bilateral trade finance and project finance markets. Andy Lennard, managing director of Texel, explains: “We offer a range of solutions and services to those involved in trade. Through our Lloyds Insurance Brokerage division (Texel Finance) we can offer insurance solutions. Through our lending operations (Texel Capital) we can offer funding alternatives to medium size corporations from emerging markets using our own equity and leverage.”
Part of Texel’s strength lies in the diversity of its activities, which involve the arranging, structuring and financing of trade flows as well as debt recovery and the refinancing of trade facilities. The company is a leading political and trade credit risk insurance broker in the Lloyds and companies market, which often provides significant benefits to its corporate finance, syndications and recovery businesses.
The continuing growth of Texel has not been hindered by the current credit crisis. As Lennard states, despite the difficulty of the market place, the last twelve months have seen Texel “increasing our revenues and client base”. This achievement is “testament to the team at Texel and the loyalty shown by our clients”.
Best Trade Finance Bank in Sub-Saharan Africa: Standard Bank
Standard Bank has lived up to its reputation as the leading trade finance bank in Sub-Saharan Africa having secured the majority of votes in this category.
Standard Bank Group branches span to 17 countries in Africa, making it one of the biggest banking networks in the continent.
The appointment of Craig Polkinghorne and Anne-Marie Woolley has been a vital step to improving the bank’s Sub-Saharan African trade and commodities business. As Woolley, director – head of trade finance and services, comments:
“2008 has seen Standard Bank refocus its emphasis on trade finance, which has placed us in a strong position when assisting clients with the impact of the developing credit crisis.”
In recent months, among other achievements, Standard Bank also opened its first full-service branch in Lubumbashi in the Democratic Republic of Congo. This was a significant milestone as it is helping the bank capture business with mining firms in the area.
The group has played a central role in the development of the South African economy for more than 140 years. It has done this by aligning its presence in the market place with the region’s evolving needs, and delivering relevant banking and financial services. Woolley adds that the geographical location of Standard Bank has allowed it “to support trade transactions between Africa and its trading partners”.
“Standard Bank is a South African-based financial services group with a global presence,” she adds. Its customers therefore benefit from extensive knowledge and expertise in emerging markets, coupled with a global outlook.
Woolley concludes: “We have developed trade finance teams in a number of locations in order to support and develop trade business between Africa and Brazil, Asia and China, and Europe.”
The location of Standard Bank’s offices ensures that it is in an ideal position to facilitate and support trade flows between countries in which it operates.
Best Trade Finance Bank in the Middle East & North Africa: HSBC
GTR readers voted HSBC as the best trade finance bank in the Middle East and North Africa. The bank has over 400 trade finance experts in 14 countries across the region, on hand to solve clients’ international trade and supply chain needs.
“HSBC has placed its trade and supply chain decision makers right where our customers are,” comments Kersi Patel, regional head of trade and supply chain, Middle East global transaction banking, HSBC Bank Middle East.
“This proximity allows HSBC’s trade team to have an in-depth understanding of customer needs and local market conditions, offer unmatched insight in structuring transactions that achieve an optimum risk and price balance, and our customer focus continues with personalised delivery support to see that transactions are processed accurately and swiftly,” he adds.
HSBC in the Middle East has been well-positioned to capitalise on the explosive growth seen in the region in recent years. Buoyed by recent years of high oil prices, most industrial and financial centres have been enjoying booming economies. Yet, as Patel observes: “An unfortunate side effect of rapid growth can be a drop in customer service and support provided.”
But this has not been the case for HSBC. “HSBC trade and supply chain has broken this stereotype. Our regional business has not only grown much faster than the underlying market but has also improved its advisory and service delivery capabilities,” comments Patel.
He concludes: “The dedication and commitment of our team members across the region to keep continuously updated with market developments, stay in close touch with our customer and listen to their needs, and aim to exceed customer expectations, is what finally sets us apart from others. We have a fantastic trade and supply chain team across the region and around the world – together this is a winning combination that will keep us ahead in the game.”